Stay informed with free updates
Simply sign up to the Chinese business & finance myFT Digest — delivered directly to your inbox.
Chinese police have raided the Shanghai offices of WPP-owned media agency GroupM, questioning employees and detaining one senior executive, according to people with knowledge of the situation.
A senior advertising executive at GroupM China has been detained for further questioning, they said. One of the people added that the matter was related to the employee’s work at the agency.
Police also spoke to other local executives during the raid, including Patrick Xu, who has been chief executive of GroupM in China since 2017, two people briefed on the situation said. Xu is also country manager for WPP China.
WPP declined to comment. An officer at the local Shanghai police station which oversees the area of GroupM’s offices declined to comment.
GroupM is one of the world’s largest media buying and planning agencies, with 42,000 employees and $60bn of global media billings — the amount charged to clients — last year. The unit brings in roughly one-third of WPP’s total £14bn in annual revenues.
China is WPP’s fourth-largest market and an important source of its growth in a tough global advertising market. GroupM, which is WPP’s wholly owned media buying and planning agency, expects China’s total advertising revenue to increase 7.9 per cent to $150.6bn this year.
The raid on GroupM comes as China steps up scrutiny of foreign businesses in the country amid volatile geopolitical tensions between Beijing and Washington. In recent months Chinese authorities have questioned staff and taken away computers at consulting group Bain and detained five local staff of US due diligence firm Mintz Group.
State-owned media also aired a primetime broadcast of police searching the offices of Capvision, an expert network group that helped foreign investors with due diligence.
Industry insiders say China’s advertising sector is rife with corruption. Last month the US Securities and Exchange Commission reached a settlement with US group Clear Channel Outdoor for $26mn for violations of the Foreign Corrupt Practices Act after its local subsidiary was found to have bribed Chinese government officials to obtain advertising contracts.
The repeated moves against private companies in China and an opaque judicial system have put the foreign business community on edge. Chinese economic policymakers have struggled to balance tackling the teetering economy and restoring confidence among businesspeople with an increasingly powerful security apparatus determined to root out national security threats.
This summer the country enacted a tougher anti-espionage law. The state security ministry has also pushed a “whole of society” approach to policing security risks — under which all citizens are encouraged to join the ministry’s fight against espionage — and opened up a public media portal to broadcast stories of spying incidents.
Read the full article here
